By Leslie D. Venzon
MANILA, Jan. 6 (PNA) — The government is addressing potential risks to inflation this year, such as the lingering possibility of El Nino occurrence, the impacts of typhoons on agricultural commodity prices and logistical issues, according to the National Economic and Development Authority (NEDA).
Economic Planning Secretary Arsenio M. Balisacan noted this even amid the low average inflation for full-year 2014 at 4.1 percent, within the government’s target of 3 to 5 percent for the year.
This, after the headline inflation declined to 2.7 percent in December 2014 from 3.7 percent in the previous month, pulled down by cutbacks in the prices of petroleum and electricity with lower increases in the price of most food items.
“Given the lingering possibility of El Nino occurrence in the first quarter of 2015, we should intensify efforts to implement programs that will help the areas that are highly and moderately vulnerable to the adverse impact of a dry spell,” Balisacan said.
He noted that logistical issues also continue to pose inflation risks.
“While the easing of the truck regulation in Manila’s ports may have possibly contributed to the moderate inflation outturn, it is critical to continue exploring a more lasting solution to the congestion problem to avoid future disruptions in the domestic supply chain that could result in higher transportation costs,” he explained.
The NEDA chief also identified other possible inflation risks, such as pressures associated with higher water rates at the start of 2015 and the impact of destructions brought by typhoons “Ruby” and “Seniang” on prices of agricultural commodities.
Meanwhile, Balisacan said electricity rates were lower in December 2014 due to a decline in generation and transmission charges on the back of improved availability of power plants and lower cost of fuel.
Meralco charges were down anew in December 2014 by 13 percent, equivalent to a reduction of PhpP0.73 per kilowatt hour.
Moreover, the sharp decline in Dubai oil prices, which fell to its lowest levels since 2010, translated to lower domestic petroleum prices.
Year-on-year food inflation in December 2014 also slowed to 5.5 percent from 6.5 percent in the previous month despite the holiday season.
“The absence of new major economic shocks, which could considerably affect food supply, as well as the normalization of supply chain of other food products in part resulting from the augmentation of rice stocks from imports and the lifting of the expanded truck ban in September 2014, may have also contributed to the decline in inflation in December 2014,” added Balisacan. (PNA)